Ten persistent myths stand in the way of Europe’s ability to address its decline. Unless Europeans can be persuaded that these are false notions, vote-seeking politicians are unlikely to make tough decisions that will pay off in the long run. So what ideas and policies can give Europe a better 21st century foothold? For starters, a quick demolition job on the misapprehensions that have lulled us into a false sense of security.

* * *

Europe is over-crowded

Far from it. Europe’s population is shrinking and there aren’t enough people in the workforce. The EU’s total population of about half a billion could by mid-century be down to 450 million or so, even with an expected 60 million badly needed immigrants.

Europe is rich

This one is tricker. It’s true that European countries are richer than developing ones. Higher living standards and savings mean we’re likely to be better off for some years, even if that means eating our seed corn, not planting it. Impoverishment will be slow, but looks inexorable. Rising inequalities of wealth and opportunity are the ingredients for future political turmoil.

Europe is strong

With 2 million men and women in uniform — more than in the U.S. and almost as many as in China — Europe’s armed forces should be the strongest military instrument in the world. Their brief air campaign in 2011 against Libya needed U.S. assistance, yet most national defense budgets have suffered further cutbacks.

Europe is technologically advanced

Europe accounts for half of all scientific breakthroughs, so one might think it the world’s most powerful technological force. But Europeans are notoriously slow at turning ideas into industrial innovations, and instead now account for three-quarters of all foreign investment in U.S. research projects. European business executives think China will overtake Europe on innovation by 2020.

Europe is resilient

Europe has the means to spring back, but must summon the will. In the league of competitive economies EU countries occupy five of the top 10 places and 10 of the top 20. Europe is still the world’s largest trading bloc and European investors’ assets are reckoned at over $15 trillion. The sinews of resilience are still strong but the muscles are wasting. Traditional manufacturing regions cry out for regeneration.

Europe is hemorrhaging jobs to Asia

Volkswagen’s revelation that it produces a third of its cars in Asia seemed the writing on the wall for European manufacturing. But it’s much more complicated; manufacturing employment is losing ground now over 70 percent of the EU economy is services, yet Europe’s trade surplus in manufactured products is growing.

Chinese auto workers on the assembly line at the FAW-Volkswagen plant in Chengdu | Goh Chai Hin/AFP via Getty Images

Europeans are losing out to immigrants

This is the populist’s rallying cry, and it’s astonishing how many people believe it. Europe needs migrants to strengthen its workforce and its economy. America is more robust because by mid-century immigration will lift its population by almost 100 million.

Europe’s voice is heard worldwide

On trade negotiations, the EU’s economic weight gives it genuine clout. Yet bigger challenges lie ahead. New global governance rules will be the acid test. The EU has the experience and skill, but will it have the collective determination to ensure its approach to issues like banking regulation and climate change prevails?

Europe is on the same wavelength as America

They share much the same problems, but not necessarily the same interests. The American nuclear umbrella meant Europeans saw security policy as a shared concern and felt able to spend less on military capabilities and outreach. But they no longer automatically follow a U.S. lead. And although EU-U.S. trade and investment is big bucks, the clouds over the TTIP agreement to create a transatlantic common market show that all’s not well.

The EU ‘superstate’ threatens national sovereignty

The idea of Brussels as an all-powerful, all-knowing superstate is for many a nightmare that’s coming true. They can relax, because it’s not. The EU’s institutions are dysfunctional and at times poorly organized. A more imaginative and less risk-averse EU bureaucracy would mean reaching out to public opinion, and that’s something the EU has shown it can’t do. It’s the European project’s Achilles’ heel. Distant, remote, inscrutable, politically unanswerable, untouched by the new austerity and seemingly indifferent to criticism, the EU institutions have increasingly few friends.

* * *

These 10 myths need to be countered by a solid plan for tackling Europe’s deep-seated weaknesses. In today’s sour and often angry climate of opinion there’s no point in presenting an unrealistic “master plan.” Some of the following “to-do” list’s 10 ambitions are easy; others are tantalizingly out of reach.

A much more ambitious infrastructure strategy

The €315 billion infrastructure drive launched last year by European Commission President Jean-Claude Juncker is a step in the right direction, but should be echoed by EU member countries, with special emphasis on housing.

The EU budget should be substantially larger

Outdated spending like farm supports should be made national responsibilities. The EU budget should be increased far beyond its 1 percent of the EU’s €13 trillion economy. EU-level spending on cross-border research and development should rise, and the EU budget should also cover much of the costs associated with the refugee and migrant crisis.

Stronger, more comprehensive EU foreign policies

The new and still too modest European External Action Service should set the international agenda, not just react to events. So far preoccupied chiefly with trade and economic relations, the EU’s diplomatic service should widen its focus to global governance and must become a more muscular security player.

EU policies must confront ‘aging Europe’

Taxation cannot continue to be an EU no-go area. The pressures of labor shortages, wealth gaps and aging will force overhauls of national fiscal policies. Europe needs to counter those trends, making EU-wide agreement on reducing tax burdens on labor to stimulate job creation a priority.

A recognizable energy-environment strategy

Europe’s dependence on imported energy and the waning of its early leadership on climate change must be confronted by the EU-wide strategy that has long eluded it. The tangle of pricing and technical barriers should be attacked at a time when over-production favors consumers.

Clear-cut EU immigration and workforce policies

Public attention is focused much more on the refugee and migrant crisis than on the shrinkage of Europe’s active workforce. But by mid-century the ratio of workers to pensioners that currently averages 4:1 will be only 2:1. Radical changes are needed, like delaying retirement, attacking youth unemployment and getting immigrants into work much faster.

Closing the gap between the EU and the people

Despite the failure of attempts to streamline and democratize EU decision-making, the need to do so is greater than ever. Decentralizing the European Commission by scattering “super-agencies” around the EU capitals would help confront fears of the EU superstate.

Give the ECB ‘Fed-style’ growth and jobs powers

The ECB’s present mandate limits it to price stability, but there’s a strong case for transferring to it similar responsibilities to those of the U.S. Federal Reserve for promoting economic growth and job creation. It’s an idea, needless to say, that’s hotly contested by a good many eurozone governments.

The ‘political union’ needed to stop the EU’s unraveling

Is a totally new departure for EU decision-making possible, desirable or just plain madness? Whatever shape political union might take, it would help forge a pan-European economy and ensure Europe’s place at the global top table. It would mean some form of “EU government” with a European Parliament majority, but is anathema to most EU states except Germany.

The snag is politics. Europe’s leaders are aware of “Juncker’s curse.” The Commission president said: “We all know what to do. What we don’t know is how to be re-elected when we’ve done it.” As the ultimate decision-makers in the European Council, they know that the reforms needed would in the short term provoke anger and resentment.

Yet they must summon the courage to do what needs to be done, even if that means losing their next national election. That’s the difference between a politician and a statesman. The former are soon forgotten while the latter are remembered, and may even come to be revered.

Giles Merritt is the founder of the Brussels-based think tank Friends of Europe and a former FT Brussels Correspondent. This text is an edited excerpt from his new book “Slippery Slope: Europe’s Troubled Future,” out next week from Oxford University Press.

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Mike

The author rightfully lists “the EU’s institutions are dysfunctional and at times poorly organized” as one of the root-causes of the EU’s dismal performance, yet does not include a reform of the EU institutions and their staff on the to-do list?

Posted on 5/13/16 | 7:23 AM CET

ironworker

The EU needs a grand, global scale project where it has the lead and involves China, Japan, India, Russia, Brazil, the United States and other countries. Jan Woerner, Director General of ESA has proposed such a project. It is called Moon Village. Ultimately, Moon Village will lead to mining and other industrial activity on the Moon and in cislunar space. The development of infrastructure on the Moon and in cislunar space will dramatically lower the cost of doing business in space and of ambitious goals of reaching Mars and beyond. Moon Village and the related infrastructure has the potential to more than double space related investment and employment in the EU as regular transportation services emerge between low Earth orbit and the Moon. Luxembourg, which is on the way to becoming a leader in asteroid mining is pointing the way. If the EU accepts the challenge of leading lunar development and coordinating the construction of Moon Village in partnership with ESA, the EU has the potential to emerge as a global leader in space development. Even though the size of the EU economy is significantly larger than the US not even including closely associated countries such as Switzerland and Norway, the EU presently invests much less in space. To seize the opportunities in space that are starting to open up, the EU needs to invest no less than the US. This issue is discussed more fully in http://thespacereview.com/article/2973/1

Posted on 5/13/16 | 7:42 AM CET

Filippo

Some should let Juncker know that democracy was created just because there is no king or aristocracy that know from above what to do. And there isn’t even such a thing as an absolute ‘what to do’ but only timely, failable arrangements on priorities so that our very problem is not knowing what to do but knowing how to change it after it is proved that is wrong or simply after that priorities change. There is no correct policy, only prevailing attitude we assume to be the closest to people’ s needs. That’s why we vote, because it is easiest than cutting Juncker’s head when he refuses to accept that if it leads not to be elected it just means that what he thinks is to be done is simply wrong

Posted on 5/13/16 | 10:41 AM CET

M

In order to solve the aging problem, here’s a “novel” idea: why not make it easier for Europeans to raise children and have a child-friendly lifestyle? (By the way, this is also what the much demonized Orban is proposing in Hungary).

Or is this for some reason not desired?

Posted on 5/13/16 | 11:07 AM CET

JC

I truly don’t understand – we know that the improvement in robotics is going to hit jobs like a tsunami so why are we still talking about importing non-EU labour. We don’t need them now and it’s likely we’ll need them even less in the future. They destroy the homogeneity that is required to sustain our social welfare model and, above all, we have repeatedly told the so-called elite that we don’t want to see our homes changed by the importation of the 3rd world and their cultures. Are our leaders determined to provoke us to imposing our will from below ?

Posted on 5/13/16 | 11:18 AM CET

Alan

If anything is dysfunctional & poorly organised it is this article. It offer reassurance that the EU ‘superstate’ does not threaten national sovereignty and then goes on to list multiple areas from larger budgets to political union all intended to create this ‘superstate’. Can’t see the book being a best seller

Posted on 5/13/16 | 11:52 AM CET

Maria Valentina Umer

Excellent summary of the status quo in EU-USA relations, but a tad too prone on the old Anglo-Saxon mode. As an admirer and long-term reader of the FT, I would have liked to see more on the UK´s recent history of promoting Anglo-Saxon rabid, neo-con policies in this country, to the detriment of all other EU members. Britain´s cherry-picking is simply unacceptable. It has its own societal problems, which can only be solved in a United EU. Or else Britain veers towards the equally rabid USA, with the same social problems. As a British citizen I am all for Remain in the EU, but not at the cost that neo-liberalism à la Cameron (or Thatchers´ political descendents) impose such on the Continent.
The Panama Papers have revealed the extent of the hyprocrisy of the British government. And TTIPP will not wash with European consumers. There´s already here enough of junk American food and American financial sharks.

Posted on 5/13/16 | 3:48 PM CET

Anne

Europe doesn’t need immigrant workers. The truth is that this “need” for more workers is the “need” to prop up the current pension-system for a growing elderly population. But it should be recognized for what it is – a pyramid scheme. If the pension-schemes require an endless stream of immigrant labour to provide a sufficient tax base to support them, then perhaps its time to admit that the current pensions are the problem, and that countries need to find other more sustainable ways to adapt to the new demographics of aging populations.

Posted on 5/13/16 | 4:20 PM CET

Maria Valentina Umer

How strong is the UK? I wish for an FT journalist to address this question. What has the UK going for it, apart from the decades-long offshores, very much promoted by all British governments and their “House of Lords“ or Whatever the British Parliament is called. The cancer in the UK stems from Thatcher having cosied-up to the neo-con Reagan. The UK has the City, the mafiosi bankster center which never had responsibility for the UK´s people. What else does the UK have? Oh, yes, the tourists to look at Buckingham Palace and the change of the Garde. Is this what Britain banks on? Britain is no longer an industrial country, unlike Germany. And Britain´s population notices very well that the rich elite has the upper hand on all British affairs. That´s why UKIP, and its call for Brexit.

Posted on 5/13/16 | 4:33 PM CET

Laura

For me, it is the duplication/triplicating may be several more levels of financial costs that make the EU an unviable prospect for the UK. Decisions for local and regional level communities need to be addressed and actioned within smaller boundaries. Bus stops and curb heights are duristicted by Brussels for villages in Britain!
Tha £ Stirling is strong and the language ‘English’ is growing faster and replacing other mother tongues across the Globe. Initially EU members had to prove financial solvent, secure and healthy, then Italy was allowed to join – it has been a nonsense ever since! Time for a shake up, revaluation and democratic moment for The People to decide.
This is the moment that History will say – they did/did not Do the Right thing!

Posted on 5/13/16 | 6:03 PM CET

Veritas-Semper

As usual, more Euro-Think – top/down policy/rule-making. The population is aging because there are no jobs which promote life security and the establishment of families, which- by the way – are anathema in Brussels.

And, the strength of Europe – the nation-sate – is being fought tooth and nail to accomplish the bureaucratic “nirvana” in Brussels. Instead, Brussels should be working to promote best growth practices in those nation-states to other nation states and thus promote growth and healthy competition to drive further growth (JOBS!)

Posted on 5/13/16 | 6:28 PM CET

Roland

I don’t really know anyone who is against immigrants but low skilled Muslim immigrants cause problems in many European countries. I don’t know of any I dunno Chinese blowing themselves up in crowded places or demand schools change their menus or dress codes to appease their superstitions. I personally think if we want migrants we should look for people who broadly fit our cultural and ethnic background and want to and can assimilate.

Posted on 5/13/16 | 11:32 PM CET

S.Alexander

With all my heart I tried to find something “workable” in this article. But there is not. Just hidden propaganda.

As such I call this article BULL…

Posted on 5/14/16 | 1:16 AM CET

Gerhard

So he claims the solution is ‘more Europe’…
Sounds suspiciously like a federalist superstate, which is what nobody outside of Brussels and Strasbourg wants.

Posted on 5/14/16 | 10:27 AM CET

Ewout

“Europe needs migrants to strengthen its economy” hahaha as if we need droves of illiterate immigrants who will feed for generations on our welfare systems. They will only cost us money. Also, they bring other nice habits along with them – extreme islam, bomb attacks, violence on women and more.
This article is completely bogus and written by someone who lives on another planet, it seems.

Posted on 5/14/16 | 3:35 PM CET

José Manuel Rita Moure

It is necessary a new project only for european project of integration. The project is dead we have the enemies in the board . It is a project of post II war. The referendums in France, Holland and now in UK are strategies for to finish this burocratic french monster .

Posted on 5/16/16 | 8:51 AM CET

Sertorius

The proper direction and future of Europe as a whole will only be resolved once Merkel et al. are permanently removed from politics: preferably by means of extreme prejudice! It will at least be a good start and a good reminder to their foreign puppeteers.

Posted on 5/16/16 | 10:53 AM CET

BlindOracle

Oh yes, Europe needs immigrants to strengthen its workforce. But this means skilled workers who know the language of the country they work in. How many of the recent immigrants meet both of these criteria? I bet more than 90 % don’t, and still a majority neither one nor the other.

Posted on 6/14/16 | 3:28 PM CET

ESU

@Maria Valentina Umer

You are a British citizen? I see nothing but criticism from your posts toward Britain. Have some pride in the society that YOU have helped shape.

Posted on 6/18/16 | 7:38 PM CET

Borat

The reason Europe is declining is because it’s no longer ‘competitive’ and can no longer compete against rising global competition (i.e. China and India) in many avenues. Now, I understand some reports claim Switzerland is the most competitive nation in the world, but those reports are flawed and are far too simplistic (only based on a handful of measures). I’ve read other reports that use models of over 20 variables including cost adjusted educated worker, cost adjusted productivity of worker, rule of law, debt levels, corruption, labour laws, innovation, cost of living etc, and once all these (very important) variables are taken into account and weighted most European nations come out very poorly, with very poor forecasted GDP growth as a result (which is being mirrored / proven in the GDP growth rates of European nations since the report was published) and as mirrored in almost every GDP forecast to date. Europe is on a very poor projection. The only way long-run prosperity can be built is by out-competing global competition (and at present China is out-competiting Europe and pulling its pants down). Europe arguably needs less “Europe” and instead needs to become more decentralised, adaptable to global change, competitive (both internally and externally – internal regulation needs to be reduced to give a fairer chance to smaller and medium sized enterprises, as at present the regulatory and economic environment too heavily favours large corps / multinationals), and freedom orientated.